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I am at a private dinner in London to discuss the state of economics education with fellow economists and representatives of big British employers. The diners agree that the “products” turned out by university economics departments are highly wanting. Many of those present say that graduates have a very narrow set of theoretical perspectives, know little about the real world and cannot communicate with non-economists. Given that many students are in open revolt about their courses – student societies calling for the reform of economics teaching have cropped up around the world under the banner of the “International Student Initiative for Pluralist Economics ” – this is an extraordinary state of affairs. Unsurprisingly, we can’t seem to agree on exactly what changes should be made.
The topic of how we should change the teaching of economics has been much on my mind recently and I have given two talks on the subject in as many weeks. At the first, I addressed about 150 undergraduate members of The Economist’s Society at University College London. Next up is a group of about 25 A-level students on a residential course near Cambridge, organised by the Villiers Park Educational Trust which provides educational opportunities for students from disadvantaged backgrounds. Most come from families where no one has been to university and where household income is less than £25,000.
At Villiers Park I begin by saying I am here to teach young people how to think rather than what to think. I say there isn’t just one approach to economics but at least nine, with no fewer than three varieties for free-market economics alone: classical, neoclassical and Austrian. I ask them not to become a “man (or woman) with a hammer”, who then treats everything as a nail, as the saying goes. I suggest they take a Swiss army knife instead and learn different theoretical approaches and research tools – not just maths and statistics but also history, politics, surveys and many other ways of investigating reality. They all seem intrigued but I cannot tell whether they have taken to my rather unorthodox view about economics.
To my publisher, Penguin, for a meeting about my new book, Economics: The User’s Guide. It is going to be the first volume in the new Pelican paperback series, being relaunched by Penguin after three decades of hiatus. My book has a lot of history to live up to. The first Pelican, released in 1937, was on economics – George Bernard Shaw’s The Intelligent Woman’s Guide to Socialism, Capitalism, Sovietism, and Fascism. This was a slightly extended version of Shaw’s existing book, first published in 1928, but the first book actually commissioned for Pelican was also about economics: GDH Cole’s Practical Economics (1937).
In saying that there is more than one way of “doing economics”, my new book will be implicitly chastising the narrow-mindedness of many of my professional colleagues. Worse, by arguing that ordinary people’s challenging of “experts” (including professional economists) is the foundation of democracy, I am seeking to undermine their intellectual authority. How will other economists react to the book? More important, how will non-economist readers take it?
I return home to Cambridge to cook aubergine pasta bake – layers of fried aubergines, penne pasta, tomato sauce, topped with three cheeses (mozzarella, ricotta, and parmesan). This was the first dish I learnt to cook from a cookbook – Claudia Roden’s classic The Food of Italy – a couple of decades ago. At the time I was newly married and my wife could not believe I had a dozen cookbooks that I read despite not cooking anything from them. The flat we were living in then was only slightly bigger than a large rug; she said she would throw away those books unless I started using them.
The pasta bake has gone on to become a firm favourite in our family and my personal twist to the original recipe is to add myulchi-jut (Korean-style fermented anchovy sauce) when I am frying the aubergine sticks to give them deeper flavour. This sauce can be used to deepen the flavour for meat, too. I use it for my version of Delia Smith’s lamb stew and for my take on brodo, Italian chicken broth (with lots of thyme).
Despite its small size, the anchovy is arguably the most important fish in the world. It is eaten in large quantities everywhere and in so many different ways: raw (a delicacy in some parts of Korea); dried (in Korea and Japan); cured (around the Mediterranean); fried (all over Asia, including India, Indonesia, and Korea); as fermented sauce (not just in Korea, Vietnam, or Thailand but also in ancient Rome – garum); and even drunk (all over the world, through the Worcester sauce in a Bloody Mary). Impressive though the culinary role it has played in so many different cultures may be, the anchovy’s economic role used to be even greater – at least in Peru.
In the mid-19th century, Peru had an economic boom based on the export of guano, namely, desiccated seabird droppings, deposited over thousands of years by cormorants and boobies, whose main food source was the anchovies migrating along the Pacific coast of South America. Rich in nitrate and phosphorous, guano was a highly prized fertiliser. It was also a key ingredient in the manufacture of gunpowder. This was a time when Europe and North America needed both fertiliser and gunpowder in large quantities.
Unfortunately, the guano boom came to an abrupt end in the early 20th century, when German scientist Fritz Haber, inventor of poison gases used in the first world war, developed a method of isolating nitrogen from the air to make ammonia, using high-voltage electricity. With this invention, the mass production of artificial fertiliser became possible, deposing guano from its throne in the fertiliser kingdom. The price of guano fell and Peru’s export earnings plummeted, dealing a huge blow to the economy.
The Peruvian story shows that it is not a country’s natural resources but its capabilities to generate more productive technologies that determine its prosperity; your natural resources may become far less valuable if others invent synthetic substitutes. Such technological capabilities are almost always acquired through industrialisation, which is why few countries have remained rich in the long run without successful industrialisation.
Once you acquire sufficient technological capabilities, you can also turn worthless things into resources. Today, in many industrialised countries, sea waves are harnessed to produce electricity, which is fuelling the oven in which my pasta bake is, wait, burning ...
‘Economics: The User’s Guide: A Pelican Introduction’ by Ha-Joon Chang is published on May 1, £7.99